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United Kingdom

Energy regulator Ofgem allows extra investment in transmission grid

Energy regulator Ofgem is to allow extra investment in the high voltage transmission grid to accommodate the expected increase in renewable generation. Ofgem proposes an "adjustment mechanism" to the existing price controls governing transmission companies which set out how much capital expenditure they are allowed to invest in the network. The adjustment will cover the period up to the next price control reviews which are not due until 2007-2008. A large proportion of the new renewable capacity is likely to come from wind farms in Scotland and offshore. According to a report last year by the Transmission Issues Working Group, connecting 2 GW of renewable capacity in Scotland will cost some £520 million in transmission reinforcement, while the cost of connecting 6 GW in England and Wales and 2 GW in Scotland could be as high as £1,125 million. Ofgem is consulting on the form the adjustment should take and expects to publish draft proposals in July.

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